INTRODUCTION
The Indian arbitration system has undergone massive changes in the recent years. The parent legislation brought into force in the year 1996, called as Arbitration and Conciliation Act of 1996 (the “Arbitration Act”) has since then undergone significant transformation. In 2015 the Act was amended to minimize judicial interference and make India an arbitration friendly jurisdiction. Further in the year 2019, the Act made provisions for establishment of the Arbitration Council of India (ACI), and powers for appointment of arbitrator. These amending Acts aimed to strengthen the arbitration framework in India by institutionalizing the process and aligning it with global best practices.
Following the changes made over the years, the government of India so as introduce further reforms floated the Arbitration and Conciliation (Amendment) Bill, 2024 (the “Draft Bill”) for public comments. This Bill has been tabled following the recommendation by a 16-member expert committee led by Dr. T.K. Viswanathan.
The Draft Bill proposes to make significant changes to the Arbitration Act so as provide a further boost to institutional arbitration, reduce court intervention in arbitrations and ensure timely conclusion of arbitration proceedings.
THE PROPOSED KEY REFORMS
Renaming of the Act
One of the significant changes is to drop “conciliation” from the title and the body of parent legislation and renaming it Arbitration Act. The Amendment Bill proposes powers of conciliation to be included into the proposed Mediation Act, 2023 in light of it coming into force. It also proposes to include online dispute resolution by making suitable provisions within the definition of arbitration.
Emergency Arbitrator
One of the most essential amendment in the proposed in the Draft Bill is the statutory inclusion and introduction of emergency arbitrator. The Draft Bill introduced provisions for emergency arbitrator by insertion of Section 9-A of the Act, vide the draft bill, which gives arbitral institutions the power to appoint an emergency arbitrator prior to the constitution of the Arbitral Tribunal. This introduction was following the Supreme Court of India’s decision in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. & Ors., that mandated for the enforcement of emergency arbitration awards in India-seated arbitrations. The proposed Section 9-A seeks to extend that benefit to foreign-seated arbitrations unless parties expressly agree to exclude it from their arbitration agreement.
Clarification of Seat, Venue and Place
The Draft Bill seeks for replacement of the term “place” with seat” and “venue” at appropriate places in Section 20 of the Arbitration Act. Section 20 gives two alternatives for determining the seat. Option 1 is by party agreement or a decision of the tribunal. Option 2 if the agreement is silent on the seat in such cases, then by defaults to the place where the contract was executed or where the cause of action arose. Option 2, however, will not apply where the agreement already defines the seat.
Promoting Institutional Arbitration
Though the 2019 amendment to the Arbitration Act introduced and made provision for the Institutional Arbitrations, however, the Amendment Bill is aimed to expands the role and powers of arbitral institutions (and the existing Arbitration Council of India) to include recognition of institutions, model procedural rules, oversight of fees, substitution of arbitrators, and depositories of awards.
Under the existing regime, arbitral institutions are designated by the Supreme Court and High Court of India, the Bill were introduced via the amendment Act of 2019, the Draft Bill seeks to amend so as to include all such institutions which can conduct arbitration proceedings in accordance with its own rule and procedures.
Reducing Court Intervention
The existing provision under the Arbitration Act, gave powers to the Courts to grant interim relief measures in aid of arbitration proceedings. These interim measures can be granted at any time — before or during the arbitral proceedings and even after the award is issued (but before it is enforced in India). The Draft Bill to limit the jurisdiction of the courts under Section 9(1) of the Arbitration Act to provide interim reliefs only before the commencement of arbitral proceedings or after the making of the award but before it is enforced. However, once the arbitration proceedings have commenced, the correct forum would be that of Arbitration Tribunal.
Introduction of Arbitration Appellant Tribunal
The Draft Bill proposes to introduces an Appellant Arbitral to be formed by arbitral institutions.
The insertion of Section 34(1-A) provides that the parties are free to choose whether they want to opt for the appellate Arbitral Tribunal or the courts to appeal under Section 34 of the Arbitration Act. However, once the parties have chosen their recourse under Section 34(1-A) of approaching the appellate Arbitral Tribunal, then they cannot approach the courts to make similar appeals.
Tighten Time lines
The draft Bill introduces various time limit so as to improve the efficiency of India-seated arbitration proceeding. The Draft Bill proposes a time limit of 60 days within which courts must dispose off the application for referral to arbitration and another 30-day time limit is provided to the arbitral tribunal to dispose of jurisdictional objections as preliminary issue. Further, a 60 day time limit has been set for allowing appeals under Section 37(1) of the Draft Bill.
Arbitration Award
The Draft Bill provides for setting aside an arbitral award either in its entirety or in part. The Bill proposes to extend the “patent illegality” ground for setting aside awards even to International Commercial Arbitrations (ICAs), which was earlier excluded.
Moreso, the Draft Bill introduces Section 31(2-A) requiring arbitral tribunals to include certain verifications in the award (e.g., capacity of parties, notice, validity of arbitration agreement) to reduce challenges purely on procedural grounds. sufficient documentary proof of default or coercive recovery shall be dismissed.
CONCLUSION
As observed, the Draft Bill introduces several positive reforms to modernise and strengthen the arbitration framework in India and bring it in lines with the global practices so as to enhance India’s position as a global hub for arbitration. Upon the Bill coming into force, it shall transform the arbitration landscape of India by boosting investor’s confidence by expediting arbitral processes and reducing court intervention.